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tv   Bloomberg Markets European Close  Bloomberg  June 30, 2016 11:00am-12:01pm EDT

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where governor mark carney will deliver a reassuring message turmoil ands of carnage -- let's bring in our chief economist at bloomberg intelligence. institutiontable amidst the instability in westminster. the trouble for carney is he cannot speak as the mpc as a whole. no measures or anything like that. but he can offer messages of wassurance, that it carrying growth momentum -- mark: he's just walking in right now. let's cross over there. spend some want to time talking about some
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uncertainty and what it means for u.k. economic performance and how the bank of england can investors bond. -- can best respond. the result of the referendum is clear, however its implications for the economy are not. change.ntry can handle it has one of the most flexible economies in the world, it benefits from a deep reservoir of human capital, world-class infrastructure, and the rule of law. its people are admired the world over for their strength in adversity. thequestion is not whether u.k. will adjust, but rather how quickly and how well. leaveaid, the decision to the european union marked a major regime shift. in the coming years, the u.k.
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movements of its goods and services, people and capital. in tandem, a potentially broad range of regulations might change. pace, brettover the and scale over these changes could way on our economic prospects for some time. while some of the necessary adjustments could be difficult and many will take time, the transition of the initial shock of restructuring and the building of the u.k. economy will be much easier with solid frameworks. uncertainty,reat households, business and investors ask basic economic questions -- will inflation remain under control? will the financial system do its ?ob
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well i keep my? -- keep mine? [laughter] you are all a little too ready to laugh at that line. why fundamental issues are monetary and financial stability are fundamental prerequisites for sustained prosperity. adjusting for these public goods requires analysis, object to judgment, and effective transparency. we will not sure from these obligations. we will continue to provide analytically-based clear eyed financial and analytical outlooks and we will outline the risks of these forecasts so that we and others can prepare to manage them. facingr-term challenges
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the u.k. economy cannot be wished away, but they can be addressed. a clear plan is needed and its measures must be implemented with resolute determination. after briefly reviewing the relationship, want to outline how the fbank o england's contribution will be to this plan and how it will unfold over the coming months. do want to emphasize the bank has taken all the necessary steps to prepare for these events and we will not hesitate to take any additional measures to take our responsibilities for the united kingdom as it moves forward. before expanding on what the bank can do, i would like to apply some rigor to the relationship between three types of uncertainty and economic performance. uncertaintylitical -- or 9/11 and remained
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distressed and volatile for years. it settled in the wake of the global financial crisis before spiking after the passing of the arab spring and tensions in eastern europe. in recent years, economic uncertainty has been elevated because of fragility in the financial system and the overhang of public and private debt. challenges have been compounded by much deeper forces that have radically all -- savings in theed global economy and moved rates into areas monetary policy finds difficult to reach. whether it's secular stagnation or a global liquidity trap, the growth is real. the more fundamental drivers of economic uncertainty are powerful forces arriving from technology and globalization, including the impact of
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technology for the automation of jobs and trade on their location as well as the consequences of global market for winner take all patterns of compensation. big forces ofe economic uncertainty the cause of this uncertainty trinity are arguably the most easily addressed. policy uncertainty is reduced when there are clear policy agreements and institutional structures that empower and discipline fiscal, monetary authorities. it is elevated when those are absent and influenced by the effect of this of the tools available to central banks, the clarity of their policy strategies, and the transparency of their communications. with very low interest rates and
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thending on policies, efficacy of monetary policy itself has been questioned. the central banks are out of ammunition is wrong, but the widespread absence of global price pressure demands our firepower be well aimed. in recent years, policy uncertainty has increased locally with measures one and a quarter times there historical with precrisis averages as high as three times that in china and a startling five times theprecrisis average on tivo of the official referendum campaign in the united kingdom. all of this uncertainty in these three components together has contributed to a form of economic post-traumatic stress disorder amongst households and businesses. people have become more cautious
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about their futures and more averse to making irreversible decisions that maybe exposed to some form of disaster risk. put another way, there may be a heuristic at work here. this is one long after the original trigger has become a remote, perceptions endure and become embedded in economic narratives whose salience affects risk appetite and behavior. this is not a trivial point. researchers show people who experience low returns throughout their lives like the depression babies of the 1930's exhibit a lower willingness to lessfinancial risk, invest in financial activities and invest less in returns. we see evidence in the risk premia and low government bond yields.
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are livingy, we through a time when heightened economicty has meant insecurity for many people despite generalized economic prosperity. --rossed advanced economy across advanced economies, wages are more some dude and inequality is more pronounced. the resulting precautionary effects of this can do for because there's a real option value to waiting. returns andek safe are put off by durables. the common thread is any has anc decision uncertain cost or payoff is in effect give. while the effect on growth of all of this is clearly negative, the effect on inflation is ambiguous. ways on demand
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creating pressures while the freeze and resource allocation can hold back productivity and aggregate supply. higher uncertainty can mean investment responds sluggishly to demand stimulus and business investment has been weak since the crisis despite sharp improvements, even in the u.k., which has been the strongest economy in the g7 in recent years. shy ofs investment is gdp and tracking well below previous cycles. forecast are projections for global growth for this year was just 3%, the slowest pace since 2009. domestically, we had expected growth in the u.k. would be 2%, partly as a consequence of an
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increasing drag from uncertainty. specifically, what we thought in may was a recent spike in u.k. economic uncertainty would lower gdp by .7% after a year. so, while material, it was less than past relationships would have sick just did because our thection was conditioned by government's policy in the referendum that would be followed. that suggests uncertainty would remain smartly after june 23. before june 23, there is growing evidence uncertainty was holding back major economic thoseons, particularly decisions that were costly to reverse. commercial real estate transactions had an cut in half from their peak, presidential -- residential real estate had gone
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down in business investment had wallowed in each of the two orders last measured. seems plausible uncertainty could remain elevated for some time with a greater drag on activity than we had previously projected. moreover, its effects will be enforced by tighter financial conditions and possible negative spillovers to the u.k.'s major trading partners. material slowing growth identified as a risk associated with the referendum now looks likely to be our central forecast. reports from our nationwide agents network and hard data, we will have to make the extent of this in the coming weeks when we make our august projections. turn to policy. when uncertainty is high, policymakers should have three of actives.
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-- the first is to conduct a sober assessment of the outlook and risk to it. andnd, need to develop communicate a plan to reduce those risks and his new opportunities. third, they should do no harm. by minimizing any confusion themselves. famous dictum,'s plan b snow plan. in my experience, a plan that is trendy articulated and trash and transparently implemented is the best plan of all. this would include a comprehensive strategy and engaging with the eu and the rest of the world, including clarifying future trading relationships, calibrating openness to immigration, ensuring the continuity of capital flows, and confirming the appropriate regulatory framework for the financial
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system. the impact of concrete progress toward these objectives would be amplified by an overarching positive and animating narrative for growth in a post brexit world. to emerge from an uncertain world with confidence, people and businesses need a fixed point by which to navigate. once identified, everyone can then play a role supporting that strategy to get us to our destination. but that strategy should the grounded in the bedrock of the u.k.'s existing policy institutes and framework. policyans fiscal anchored in long-run sustainability, but trust by the office of budget responsibility and it means respecting the frameworks for the other arms of macroeconomic policy instead of a statute and as conducted at
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the bank of england. has clear remittance and can deploy a wide range of instruments. the bank has operational independence and its policy strategies and indications are decided by independent expert committees whose members are individually accountable to parliament for their analysis and policy actions. policyk conducts transparency and are straight with the british people about the risks and trade-offs in the pursuit of its objectives. this institutional framework is critical to reducing uncertainty and is essential to economic prosperity. with all that as a backdrop, let me describe some of the concrete steps the bank has taken to address this uncertainty and how
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we can be expected to act in the weeks and months ahead. let me begin with financial policy. the bank of england relies a long time ago that banks had been willfully undercapitalized in the run-up to the crisis and theed to build up to serve economy in a risky and uncertain world. haveeforms that followed been an but the capital requirements of our largest banks now 10 times higher before the crisis. moreover, the bank has stress tested our banks against scenarios far more severe than the country currently faces. in fact, our 2015 stress test entailed losses twice, two times, those experienced during the global financial crisis. thets meeting last march, ftc included the risks around the referendum was the most
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significant risk to financial stability. it is because we took those risks seriously in advance that the bank was able to draw on its supervisory expertise. as a result of all of these actions years ago and actions in the last two months, u.k. banks have raised 130 million pounds of capital and have 600 ilion pounds of high quality look at assets. , in order to support market functioning, the bank of england continues to stand ready to provide 250 billion pounds of additional funds through its normal market facilities. precaution and reflecting the possibility that heightened uncertainty may last a little while longer, today, the bank of england is announcing will extend our offer on adexed long-term repose
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weekly basis until the end of said timber this year. we expect institutions to draw on this funding if and when appropriate, just as we expect them to use their own resources to provide credit, support markets, and supply financial services to the real economy. in order to have confidence and plan for the future, financial institutions, like the rest of us, desire certainty. that's why the bank will be clear about the regulatory framework for financial institutions. we have established our liquidity framework. it is up and running and effective. and the spc has finalize the capital framework and we are steadily implementing measures to end the scourge of too big to fail. want to be absolutely clear --
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nothing in financial regulation has changed as a result of last week's referendum. is the law and the rules are the rules. the bank is continuing to implement the regulatory framework until any new arrangements with the eu take effect. by ensuring banks are resilient by providing regulatory certainty so those institutions can operate and plan with confidence, the bank of england is ensuring the financial system can provide credit to businesses and households. means this progress time the financial system will dampen the aftershocks of recent events rather than amplify them. next tuesday, the independent ftc will release its biannual assessment of risk in its financial stability report and
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take any action consistent with public accountability. we will take questions from the media that day and the following week, we will testify before parliament. let me turn to monetary policy. may, the mpc set out our central outlook for steady growth accompanied by a gradual return of inflation to target. statute, they committee identify the most significant risk to that forecast. it identified the most significant risk concern the referendum. this was the view of all nine members of the npc. in may, we judged a sustainable return of inflation to the 2% target probably requires a gradually rising pattern for bank rate as growth picked up,
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jobs and wages increased and lower commodity prices faded. its agreement, the nbc has described how a vote to leave the eu could materially alter that outlook for growth and inflation. as a result of increased uncertainty and tighter financial conditions, u.k. household could defer consumption. this all lowers labor demand and causes unemployment to rise. through markets and confidence channels, there are risks of adverse spillovers to the global economy. at the same time, supply growth in our economy is likely to be lower, reflecting lower capital accumulation and the need to reallocate resources across different sectors of the economy. may be those dynamics exacerbated by higher uncertainty and tighter financial conditions.
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finally, as we expected, sterling has depreciated sharply. this will support net trade. a lower exchange rate will mean higher prices for imported goods, energy and capital goods and consequently, lower real incomes. prior to theid referendum, the culmination of these influences on supply and demand and the exchange rate lead to a materially lower path for growth and a higher pass for inflation. in such circumstances, the npc will face a trade-off between inflation on one hand and avoiding undue volatility and output of employment on the other. for monetaryon policy will depend on the magnitude of each of these affect. noty view, and i am prejudging the views of other
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independent members of the mpc, the economic outlook has monetaryted and some policy easing will be required over the summer. make an initial assessment on the 14th of july and a full assessment complete with a new forecast in its august inflation report. in august, we will discuss the full range of instruments to supply that monetary stimulus is i think it is important to stress that these judgments about instruments and from the will benefit bank being a joined up institution. praexample, through the insurers and the oversight of canemic risk, the bank
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understand better the net impact of any monetary actions on businesses and households. as we see elsewhere, if interest rates are two low, the probability could reduce the credit availability or increase its price. i can assure you in the coming months, the bank can be expected to take whatever action is needed to support growth subject toinflation being projected return sustainably to target over an appropriate horizon and inflation expectations remaining well anchored. have been here before will know this, but we are in the courtroom of the bank of england. above the central arch is not a clock but a weathervane. originally installed in 1805, it played a role in a different type of uncertainty, meteorological. east,he win loot from the
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ships could travel up the thames, meaning london merchants would need credits to purchase cargo. when it blew from the west, the reverse happened in credit would need to be withdrawn. was a regency era forecasting model that help provide stability. today, it has to be said the economy is more complex -- [laughter] and our forecasting models are a little less reliable. [laughter] the bank and its policy committees have identified the clouds on the horizon and we can see the direction of the wind has changed. over the past few months, working with the chancellor and her majesty's treasury, we have put in place contingency plans shock and the market these are working well.
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over the coming weeks, the bank will consider other measures to promote monetary and financial stability. in short, the bank of england has a plan to achieve our objectives and, by doing so, to support growth and jobs and wages during a time of considerable uncertainty. part of that plan is ruthless truth telling. one uncomfortable truth is that there are limits to what the bank of england can do. in particular, monetary policy cannot immediately or fully the implications of a large negative shock. potentialthe future of this economy and its implication for jobs, real wages, and wealth are not the gift of monetary policymakers. these fundamentals will be driven by much bigger decisions, by much bigger plans being formulated by others. is continue to
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relentlessly pursue monetary stability and, by doing so, facilitate the adjustments that are needed consistent with those plans and for this economy to reach its full potential. you for yourthank attention and i believe we have time for a few questions. governor mark carney who says the bank of england will probably have to loosen policy to deal with the fallout of the brexit vote. he warned there's only so much he can do to protect economy. this is the second time he has addressed the nation since friday. he says the central bank won't hesitate to act when it comes to safeguarding the economy or the resilience of the financial system and he also said the boa -- boe will continue its options of consider to use a host
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other measures. let's listen in to the queue and day. responsibility of the other 15 members of the mpc and ftc, all of whom came to the same conclusion i did about the risks to the economy. all of those individuals and their successors are committed to discharging their shapesibilities, whatever of the government, whatever individuals are in that government. this is a professional, technocratic institution, and we will continue to do our job. >> given what you said about uncertainty and economic and financial stability, how can the bank assess what it needs to do or the likely pass of u.k. economy while politics remains in such a total shambles? >> i
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want to endorse your description. in a writteno and theof the speech econometrics behind the speech reflect the relationship between uncertainty and those egg economic decisions. other advancedd economies and we have some sense what that is likely to do to those big decisions and to the path of the economy. that is the first thing we can do. whatever the source of that uncertainty, whether it is geopolitical, a financial shock somewhere else or because of simple policy uncertainty, to use a polite term. get a sense of what that could mean and calibrate our response to it. what happens over time as we
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search to see those affected and the orders of magnitude of what is actually happening in the economy. the advantage, there's a big advantage of able to anticipate those effects. advantage to be able to anticipate a certain outcome of the referendum would lead to a form of financial market shock and as a consequence, recognizing in advance, to dampen that shock and speed the time with which things stabilize, it can be an advantage. again, if we have a high degree of confidence of direction, and that isrocess how we react to the whole thing.
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richard first. >> you say you have a plan. you seem to be the only part of the establishment that does have a plan. a sign of the seriousness of the situation that you have chosen to give this reefing today, which is something i cannot recall governors doing on previous occasions, but isn't that a sign of the seriousness? >> it is a sign of a few things that have changed all stop there multiple committees and issues and over the horizon and the ftc horizon, there is the decision next week, to nbc --
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a value tos and setting expectation, providing a short-term roadmap and a framing. more in the way of responsibility. the standards of transparency have changed and the expectations of businesses, the analyst community, in terms of , theimeliness sophistication of everybody has changed as well. thing is this institution can react more rapidly than other institutions. we can meet in afternoon and make decisions if necessary. it is appropriate we would formulate a response more rapidly. i think what is important is we
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try to communicate -- and part of what i am trying to do here it is all linked up in the bank of england. we are not going to take a monetary policy decision which gives with one hand and is then on the other hand. because we have a monetary responsibility and supervisory and financial responsibilities, we can now ensure that is the case. for all of those reasons, that is why this is happening and that is to make no comment on the speed and relative organization of the political fight. >> the markets have kind of columns down over the last you days but in those early hours when the pound was falling sharply and markets looked very
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nervous, the bag have to act as market maker of last result -- matt -- of last resort? and a second question -- you said things are more or less in line, perhaps a bit worse. do you think a recession as possible or maybe likely? thehat i would stress on first question is there were some pretty big moves in the currency. that was to be expected. it was expected given the scale of the change. those markets function very well. there were huge volumes. so while the currency was moving, it wasn't moving because of market technicals, it was moving because of opinions of investors as new information came in. the market was functioning and you don't want to get in the way of the market.
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there was a need for the currency to find a new level. i'm not making a comment, but just to go directly to your is on what he will do your second question, we will do a full assessment. were confident in his that we expected a slowdown in growth and increase in inflation. weathervane, my that is the way the wind is blowing. degree,extent, to what you will have to wait for a first full cut on that when we have our first full rejection. the judgment will have -- does it merit policy response and if so, what time of monetary policy response?
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the point i would make is twofold -- threefold. one is the sense of direction. not fatalistic about this. we will react. thirdly, the reaction, the impact if we decide as a committee to provide them, it takes time. there is a value to making those judgments as quickly as possible. is there anyone who's not a journalist who wants to ask a question? i've got time for a couple of more. >> there's a lot of unprecedented level of uncertainty and one of the ways the bank can perhaps help to reduce that is through the kind
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of monitoring you do in the economy. i presume that will become stepped up and enhanced in the next few months but i wonder if you have lands to share that in real time with people in the investment community? >> we will be as full some as possible in our agency minutes. you get the minutes at the time of our decision and we basically yet the real-time agency information just before we get those decisions, so it probably better and i would be nervous about putting that additional p7 formation out which might be given to much weight and send the wrong signal or mislead unintentionally. we will try to be as full some as possible in letting people know.
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there is a general point that for us to do our job properly, we have to come straight with the british people. it means where we think the economy is going, what the orders of magnitude of risk are, what we are doing about it and what that can and can't do. does theirint which re-emphasizing is do it in a way that uses all the advantages of this organization, so not have three silos. when it comes to monetary policy, there are a range of potential easing options that we have. it's not just about bank rate and it's not just about what this institution did in the last crisis. to think hard about the implications of certain market moves, the low level of overall and the impact on not just
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banks but insurers and others to ensure that if we are trying to provide stimulus, that it is as effective as possible. for you and anyone who is interested, what we will try to do in august is communicate those trade-offs as clearly as possible. patient so i will take you and then just one more question after that. you mentioned a level of uncertainty. i wonder if you can give an idea of whether it is proportionate to the risk? do you share your predecessors view that the economic warnings that were made by the remain campaign were exaggerated?
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>> let me say this -- i virtually always agree with lord king. i have not seen his specific comments, so on the principle of on something without having seen it, i'm going to pass on that. about theion scenarios that were produced, let me -- the scenarios produced by the treasury, which is a technocratic institution, but if ,ou look to the oecd scenarios part of what drove those is a certain form of relationship with the european union and the rest of the world. everyone is becoming familiar with various models, the norwegian model and the canadian model, etc.
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the question best to wreck to do others is what is the plan and what adjustments to those models and how quickly is that economy going to move there? what do they think the adjustment costs and process would be? our issues others are thinking very hard about. they are thinking hard about and will lay out and as that becomes economicthe potential adjustment required and opportunities that come from that will be clearer. while it is uncertain and while it is potentially one of the the difficult models, orders of magnitude of the adjustment can be quite considerable. in the near term, we are not dealing with an end state model, we're dealing with an uncertainty shock to the economy
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and its implication for our spending.nd household >> i want to come back to the question about your own personal physician. in the referendum campaign, he said you were only saying what you are saying about the impact about brexit because you used to work for goldman sachs. >> how does that follow? >> senior members of the vote leave campaign suggested you crossed the political line in what you are saying and you should resign. power,e people come into you will have to resign, won't you? >> first off, what i said about the risk to the economy from a monetary perspective and
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financial stability perspective, what i said was the view, not in the case of the monetary policy committee, the other eight members of the committee, and in the case of financial policy committee, the other nine members. because there are members of both, and totals to 15 other expert individuals who came to the same conclusion. terms of thein risk to the economic outlook and in terms to the risk of financial stability, does anyone in this room not think that those risks have begun to manifest? does anyone in the country think that those risks have not begun to manifest? job.e did our we identify the risk. we won't always get it right. we will identify the risk and be concerned or have an economic forecast that might not work
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out, but it will be a rigorous process. the rigor, the analysis, the identification of the most important risk. as a consequence of doing that, we are going to make the job easier not just for the financial system, but the job of adjustment easier for the country, which is what matters as a side point for some of those individuals who made that this is because the out come will be better than it would otherwise have been. same 16 committees, the individuals are going to do in the next few weeks is assess the consequences of the decisions and how we can best support the adjustment that is needed in the economy and do that in a way that is part of a coherent plan
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that is transparently explained and gives us all the best chance of seizing the opportunities that come from this decision. that is what we are doing and it would be irresponsible of me or any of my colleagues to walk those obligations because those are obligations under statute. thank you all for coming and enjoy the rest of your day. the governor of the bank of england, defending the assessment of the risks that could emanate from the brexit. as we know, the brexit vote did materialize and he was defending their stance. what is the headline? in his view, they will probably have to loosen policy post brexit? jamie: i think that was always
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the most likely out come. he does not speak for the mpc as a whole, but is there any reason to think they would not think the same? i think possibly a 25 basis point rate cut. he also said we would consider a whole host of other measures. give us an idea what those other measures could be. is likehe goto option the lending scheme, something that encourages banks to lend because their balance sheets will be under pressure. puts a fall under the lending. i don't think it is a time for cutie now but the options and possibilities and the sensible thing to do in all of this. one of the interesting
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things he pointed out was this is not the last crisis. the pound dropped about 1.2% and the ftse 100 rose. pound dropped, the ftse rose, does that tell us anything about how the markets are assessing the events of the last few days? jamie: it wasn't guaranteed that there wouldn't be a rate cut in august. i think it really just cemented that. he's been pretty clear about what his intentions are in the summer. vonnie: he made it very clear he was not commenting on the current level of sterling and said the market function needed theind a new level based on opinion of traders but the lower exchange rate will lead to lower real incomes. that's not even a question. will the bank of england be so
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concerned about it that it will push them to do something? jamie: there is nothing the u.k. can do about this. it's a permanent shock and the exchange rate is lower because of the impact from brexit. .ou can't offset that the only thing he will be able to do is loosen policy and hope the damage it causes is not too serious. you wrote a wonderful piece months before brexit materialize on the potential impact of the economy. today come a carney said there would be a material flowing. that is now their central forecast -- uncertainty may have a persistent drag and it cod remain elevated for quite some time. remind us of the economic place inhat could take the next year or two years and
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beyond. jamie: the key thing here is the word slowing. that does not suggest there's going to be a contraction. that is our view at bloomberg intelligence. a slowing but no serious slump. from here on out, we think the growth will slow markedly. thereafter, we expect some improvement as uncertainty receipts. we think uncertainty is going to last a long time. take a long could time to come together and we think the effect will be long-lasting. but we don't expect a significant recession. the spillover -- carney sees a risk of spillover to other economies from the u.k. how this impacts
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monetary policy elsewhere among the big central banks. jamie: the u.k. is a small economy, so a direct impact .hould be relatively limited the bigger risk as you have a tightening of financial conditions and we've seen it with the selloff in a can contaminate things elsewhere. it's not a direct effect of the u.k. economy slowdown, they general effect. the people are now focusing more carefully. mark: great to hear your thoughts. thank you for sticking around during mark carney's speech. the chief economist with bloomberg intelligence. coming up, erik schatzker will interview the chief executive of arc lace at 12:00 eastern. this is bloomberg.
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howard davies, chairman of the royal bank of scotland gave his outlook. take a listen. >> on the plus side, what we have seen is the bank of inland was well prepared. there were liquidity lines in place and markets have functioned effectively. 2008e not anything like in or 2009 and i did not either george soros line about that. think things have worked well in the bank of england deserves credit. there is obviously quite a bit of repricing going on. if you look at what has happened in the economic forecast, the consensus has fallen by half a point. that may or may not turn out to be right that people try to factor that in and say who are the winners and who are the losers?
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suffer in those circumstances. i think you have to try to see through the fog of these short-term changes and say what has really changed? i think it is probably true the exchange rate has changed. is having a medium-term effect, so that is probably an enduring change. vonnie: does that suggest a new fall of the british power? >> i never like to think of exchange rates -- it's just a price, a relative price. but i think what you are seeing is a sense that the u.k. has become a riskier place to invest. we used to pride ourselves on
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financial and clinical stability. u.k. looks like a higher beat stock until we settle down, you're seeing that priced in. : do the politicians of the united kingdom have to move faster? does labor have time to wait for labor day, said number or october, or do they have to get rings done quickly? >> i think the timetable they are on is about right in my view . i don't think it is plausible to outk you could have a fully negotiating strategy within a week or so when the prime minister was clearly expecting to win the referendum. what you are hearing from the european side is they want us to get on with it. but i also think you are hearing of months to
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prepare what we are pitching for in a negotiated new relationship with the european union is reasonable. i think the conservative party were right to bring forward the election. done in therk being cabinet office to try to produce a brief will dovetail in with that. i think then, there will have to be some quick decisions made. inm talking to others continental europe, they are prepared to give us that amount of time, but not much more. mark: stay with us. bloomberg markets continues. tune into the next hour -- erik schatzker will interview just daily. ♪
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matt: good afternoon from london, where it is 5:00 p.m., midnight in hong kong, noon where you are in new york. i am matt miller. oliver: i am oliver renick.
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scarlet: i am scarlet fu. welcome to bloomberg markets it we have breaking news -- the ecb is said to weigh looser qe rules according to euro area officials discussion -- familiar with the discussions. the european central bank considering loosening rules for bond purchases to ensure enough debt is available to buy in the aftermath of the vote from last week. thatymakers are concerned the securities eligible have shrunk according to people familiar with the discussion. at governing counseling members favored changing allocation of bond purchases away from the size of the nation's economy to one more in line with the size of the debt, and if you look at the impact with the euro-dollar, this is an intraday chart. right now it is plunging. taking a leg off. session lows here for euro-dollar.

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